Impact Measurement: 3 Tactics + 3 Levels to Consider

Posted on January 17, 2012  by Lauren Burnhill

Every investor out there has preferred metrics for evaluating financial performance and returns, but we are all struggling to build metrics that offer comparability and predictability with respect to social and environmental performance and returns. In our eagerness to demonstrate that pursuing multiple bottom-lines is worthwhile, we’ve sometimes strayed into the realm of irrational exuberance. We want to measure everything! And our measurements should be statistically meaningful, provide clear market and policy signals and have no financial impact on our bottom line. Let’s get real people.


I used the term “build” metrics for a reason. A prerequisite for the availability of robust longitudinal data is the passage of time. Hence the word “longitudinal”. Improvements in socio-economic well-being don’t happen overnight (unless you happen to luck into a reality TV show gig). What you CAN learn/know in the early stages of a venture with social impact (VSI) is different than what you can know and learn five or ten years down the road. Unless you plan on sitting it out and waiting for others to collect data over time before making any impact investments, you’re going to need to start simple, and have a plan for gaining deeper insight as the VSI grows.


Start with a practical and respectful approach to impact measurement. You don’t want to spend a boatload of money to find out that you’ve created 50 jobs that increased household income and nutrition for 250 people. Furthermore, the people who are the objects of your measurements are people: not objects of charity, not things. They have the same right to privacy that you and I do – and before you ask them to give that right up so that you can understand the impact of your investment, think about what you really need to know versus what you’d like to know. Given your core values, what impact is most important for you and how can you measure progress toward that impact goal?


Three tactics to keep in mind:

1. Pick impacts that can be measured. If you can’t get raw data, or the cost of getting data is going to be significant, you may be over-thinking the problem. What information can you gather at little or no cost that will answer your questions about impact and help your portfolio company grow a better business?
2. Get baseline data: If you don’t know how much protein was in a child’s diet before your nutritional supplement hit the market, you’re going to have a very hard time figuring out how much better off that child is after consuming your product. If you’re going to invest money up front in impact measurement, start by getting good baseline data around the specific impacts you plan on tracking.
3. Be ethical: Your VSI is, to some extent, a social change experiment. The objective may be to improve the socio-economic well-being of the target market, but getting there usually requires that target market to adopt new behaviors, practices and values. The people who make up the target market struggle to survive in conditions far more onerous than we may be aware. Think twice before you violate their privacy, frame questions that threaten their dignity or ask questions that are illegal in your home market. You may want to know how many indigenous women are working in the company, or how their average salary compares to non-indigenous workers in similar jobs – but how is that information going to be used once it’s acquired? Make sure that the means you use reflect the same values as the impact you hope to achieve.

Now here’s a big secret that can help you get more value from an impact investment. Impact isn’t just the effect your VSI has on the target market. There are three different levels of impact that you should consider when looking at a possible investment:

1. Impact on the Target Market: Of course you need to know that the product or service offered by a potential VSI portfolio company is delivering promised returns, within the projected revenue and expense profile. This is your level one impact.
2. Impact of Internal Operations: Level two looks inside the VSI to explore whether customer-focused values are reflected in employee and organizational practices. Does the company offer benefits to its workers? Are there training and professional development opportunities? Is any element of compensation tied to performance (individual and/or firm level)? Does the company recycle? When renewable energy sources are available, are these being used? Ceteris paribus, a company that treats its employees well and cares about the environment is more likely to deliver long-term performance than one that uses human and planetary resources wantonly.
3. Impact on the Eco-System: Level three looks for higher order impact. Are collaborative stakeholder relationships valued? Does the company participate in industry associations? Does management regularly and proactively dialogue with regulators and policy makers? Are suppliers screened? Is the company adding value to its market as a long-term sustainability practice, or is it just minding its own business and hoping for the best?

Impact measurement isn’t a simple task. Alongside the challenge of what we measure, when we measure it and who bears the cost, we need to dive more deeply into the complementary task of integrated reporting. We have IRIS impact indicators and GIIRS impact ratings, Sustainability indicators and ratings (Morgan Stanley, EIRIS and others), ESG indicators (Bloomberg and others), the Global Reporting Initiative, the One Report movement and all sorts of worthy efforts to develop standards and practices around an evolving multiple bottom-line ethos. For now, we each need to pick a set of indicators, use them, report our data and pay attention for convergence opportunities.


Back when dinosaurs walked the planet, industry conferences were few and annual events were often commemorated with a poster. At my very first international development conference, I received a poster that I have to this day – Miró-like modern art splashed in black, red, yellow and blue on white, the name and date of the conference, and this statement, scrawled in cursive across the bottom of the poster:


“We are all going to become one community, or we are going to die”


Bold, brutal and dramatic, but we only have this one planet. Let’s make sure the impact we have on it is something we can live with by making ALL investments multiple bottom-line impact investments.


Source: http://tmitm.wordpress.com/2012/01/17/impact-measurement-3-tactics-3-levels-to-consider/

Top 5 Impact Investment Trends You’ll See in 2012

Posted on January 10, 2012 by Lauren Burnhill

Next Billion Photo

As Impact Investment gains momentum and generates increased investor interest, impact financial intermediaries have scrambled to create new products and strategies that meet investor needs and provide scarce capital to ventures with social impact (VSIs). I see a number of trends emerging through these exercises and have flagged five of these to watch in 2012:


1. Impact Investment Funds of Funds (IIFoF) will come on strong: Most money moves into microfinance or impact investment through special purpose fund vehicles. Raising capital for these vehicles is time-consuming, expensive and highly inefficient. New funds, with new managers, are often small and resource constrained, adding to potential investment risk. The new crop of impact investment advisors hope to overcome some of these constraints by creating IIFoF structures that can serve as anchor investors in emerging funds while at the same time offer a more diversified product to their own investors.


Before you rush to invest in an IIFoF, ask yourself what the Fund Manager is offering to portfolio investee funds, aside from a slug of capital. Where the Fund Manager has a robust plan for supporting investee funds, enhancing governance and adding value, an IIFoF may indeed offer superior returns, compared to a single fund investment. On the other hand, if the Fund Manager assumes that financial capital is the primary area in which new funds need support, you’ll still benefit from diversification, but the potential return profile is a bit more opaque.


2. Mobile Payment Networks and Systems will displace MFIs in delivering financial access to the Base of the Pyramid (BOP): As the microfinance industry has grown, poverty alleviation theorists have pushed for the addition of savings products in what has been a largely credit-oriented industry. With many microfinance practitioners (including myself) moving from access to finance into “access to life” issues, poverty alleviation theorists have been looking at MFIs as conduits for health insurance, renewable energy programs, education finance and so on. The thinking is that since MFIs have regular contact with the BOP target market, they are ideal distribution channels for non-financial goods and services that improve BOP quality of life. While an interesting theory, most MFIs are still struggling to adapt to regulation, manage growth and move from single product (working capital loans) dominated portfolios to offering a robust and diversified suite of financial products. Regulatory issues aside, there isn’t enough bandwidth in most MFIs to tackle other social sector challenges.


Mobile payment networks are stepping in to fill the gap. MicroEnsure  clients in Africa can purchase and pay for health and other types of insurance using their mobile phones. Simpa Networks uses a mobile and digital control network to offer prepaid renewable energy solutions for rural villages in India.


3. Latin America will return to favor: In recent years, multilaterals and development experts have favored investment in Africa and Asia and reduced or eliminated new commitments in Latin America. The argument for doing this? More poor people and poorer poor people outside of Latin America. The problem? Latin American economies and societies are far more “investment ready” than most African and many Asian counterparts. As an investor, I want Latin America in my portfolio. As a social development expert, I believe that poverty is poverty, wherever it occurs.


Can you ethically exclude Latin America from your impact investment work? Aren’t you then saying that you want to help only the most miserable and to heck with the moderately miserable? Excluding the Latin American BOP won’t necessarily get you better impact results given investment readiness issues; but it will probably lower your portfolio returns.


4. Focus on Operational Excellence will become a key differentiator across impact investment funds and firms. Mainstream asset managers asked about innovation trends and what it takes to outperform  (Investment Innovations: Raising the Bar) consider operational excellence to be a core driver. In the impact investment world, we’ve been more focused on selling a new vision and figuring out how to report on the multiple bottom lines we’re promising investors. Few of the impact investment funds & firms coming to market have a lot of hands-on experience with social sector lending, much less equity investing. We must, collectively, demonstrate that we are giving as much thought to how we can add value through our work with #ImpInv portfolio companies as we do to the issue of what social & environmental impacts we plan to measure. Failure to do so will contribute to sub-par results that make #ImpInv a temporary bubble rather than a long-term agent for sustainable change.


Are you thinking that you know how to invest in health clinics because the clientele are the same poor people served by the MFI you invested in a few years ago? Regardless of whether the target market is the same or not, lending to financial institutions isn’t the same as lending to corporate whether these latter are small enterprises or giant conglomerates. And I don’t care how many years you’ve been a lender, there’s no reason to believe you’ll make a good early stage equity investor, social or otherwise. What I hear from colleagues with money to place is that “there’s no there there” – they’re hearing a lot of high level mission statements, without a lot of substance behind them. What they’d like is to hear is impact investment fund and firm managers talking about the HOWs in addition to the WHOs and WHYs.


5. Broader discussion around Values & Sustainability, and how these relate to what we can achieve as a society:  I hope we get to a time when ALL investments are sustainable and multiple bottom-line. Before we get there, we’ve got to cross the “impact measurement” hurdle and that implies a clearer understanding of what we want to accomplish given the values we hold dear. It’s important to note two things:  (1) having a mission statement is not the same as having identified and actionable core values; and (2) we do not all value the same things to the same degree and that’s OK. Successful product development and differentiation is likely to happen faster as a result, assuming the values discussion comes first.


Getting clear on values will save investors money (and reduce the stress on investment managers). Most “impact indicators”  cost money to collect, and some – like those requiring randomized control trials – may cost a significant amount of money. If you know what matters most, you can focus on greater depth of understanding in those priority impact areas and skip the rest.


Values clarity may also help address one of the biggest problems I’ve found in my exploration of impact measurement. Specifically, the social and micro-entrepreneurs we invest in are people, not objects of charity. They have human dignity and the same rights to privacy that you and I expect to enjoy. When we ask questions that are illegal to ask in our home markets to satisfy our drive to understand impact, we are crossing an ethical boundary – we are essentially saying that the ends (economic development, peace etc) justify the means (privacy violations and other “crimes” against human dignity). We are certainly intruding into the private lives of our clients to a greater or lesser degree! Measuring fewer –but more important to us — things would not only save money, it might also lessen the ethical transgressions we commit in the pursuit of impact. I’d be very happy about that.
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My trends list derives from unscientific observation of the impact investment industry and lots of conversations with a wide range of social entrepreneurs, private investors and development organizations. One additional thing you’ll be hearing more about in 2012? Convergence. It doesn’t mean what you think it does – but what it does mean has significant implications for sustainability, impact investment and the possibility that socio-economic conditions will improve for the BOP during our lifetimes!


How do you think Impact Investment is changing or will change in 2012? Let me know what you think!


source: http://tmitm.wordpress.com/2012/01/10/top-5-impact-investment-trends-youll-see-in-2012/

Mistakes of a Social Entrepreneur

Hosted by Jeremy Hockenstein (February 2012)

This month marks our 10^th anniversary as a social enterprise. On February 4, we celebrated our achievements and successes with staff, clients and donors at a big party in Phnom Penh, as well asonline. And we invite you to download our e-book “The Confidence to Dream”, in which several of our graduates tell their stories in their own words. Here on Social Edge, we will also share some of the things we would do differently, if only…

Digital Divide Data (DDD) creates jobs for talented youth inCambodia, Laos and Kenya by delivering business process outsourcing services to clients. Working in this enterprise, while attending university, empowers our staff with the skills and experience they need to lift themselves out of poverty. We are now employing nearly 1,000 staff.

When I reflect on the past decade, I often joke that our current board of directors would have never approved the plans we used to start-up ten years ago! Since then, we have taken countless missteps. Over the next few weeks, I would like to share some of those mistakes—and what we’ve learned. It’s a bit easier after ten years to talk about failure, but I hope some of you will be inspired to share what’s not working in your organizations. In my experience,acknowledging what we’re doing wrong has been the first step towards improvement. I’ll start with a few—and then let’s engage in a dialogue about these and others.

Dream Big, but Think Realistically

When we started in Phnom Penh, DDD employed 20 youth. When people asked me about the difference we were making, I told them it was huge—that our impact on those young people’s lives was infinite. But we were ambitious. In 2003, we made a plan to open new offices every year. Once we realized the complexity of managing operations across offices in Phnom Penh and Battambang, Cambodia and Vientiane, Laos, it took seven years to launch our next office in Nairobi, Kenya!

Focus on Whom You Can Help

Initially, DDD was ready to give a job to nearly anyone who walked in the door and could type. We took support from a donor to work with a group of young women who were vulnerable from their experience being trafficked, without knowing much about this population. While we worked tirelessly to provide support to help them stabilize their lives, their level of education didn’t prepare them for the type of jobs we had at DDD. We helped them find jobs that fit their skills—and established criteria of high school graduation for new recruits.

Hire Ahead of the Curve

For the first three years, my colleague and co-founder, Jaeson Rosenfeld and I, sold all the client work we did at DDD. In our early years, we found great volunteers and made a few hires of bright, passionate people—but with no direct experience in our business. Our early team did amazing things. And, now, as I see the value that experienced staff brings, I wish we had found a way to hire talent like this earlier.

Food for thought:

• As social enterprises, we are often resource challenged; how can we collectively benefit from sharing our experiences about what works and what doesn’t?
• What have been your challenges in expanding operations, hiring experienced staff and defining your target audience?
• If you could turn back time in your social enterprise, what would you do differently?
• What’s the “best” mistake your organization made; the one that you learned the most from?

Join Jeremy Hockenstein, co-founder and CEO of Digital Divide Data, in the conversation. And share your mistakes and your victories!

Source: http://www.socialedge.org/discussions/social-entrepreneurship/mistakes-of-a-social-entrepreneur

Los 10 mandamientos de la RSE

25/02/2012 05:23:19 p.m. | América Economía.- 

El estudio “El estado de la RSE en América Latina 2011-Percepciones de consumidores y ejecutivos de empresas”, de la Red Forum, indica que 72% de ejecutivos y consumidores latinoamericanos considera que ha mejorado el desempeño de las empresas en RSE, pero todavía hay mucho por hacer. 


Los 10 mandamientos son: 

1. “Análisis de intangibles”
2. “Honestidad y coherencia”
3. “Relacionarme con mis siete grupos de interés. Todos son importantes”
4. “Hacer bien su propio trabajo”
5. “Determinar quién dirige el programa de RSE”
6. “Diferenciar entre usar recursos propios o de la empresa
7. “Presupuestando la RSE”
8. “No confundir RSE y filantropía”
9. “Apertura para modificar la forma como se han venido haciendo negocios”
10. “No solo las empresas deben ser socialmente responsables, sino también los clientes”

La revista América Economía consultó a diversos especialistas y elaboró un decálogo para aquellas empresas que desean incorporar un programa de RSE.

Google prepara sus lentes de realidad aumentada

Publicado el 26 febrero, 2012 por Augusto

Considerando la gran cantidad de tiempo que los científicos llevan hablando de la posibilidad de llegar a la realidad aumentada, es decir, al añadir capas de información extraída de Internet a la realidad tal y como la conocemos, el próximo lanzamiento de los lentes de Google que podrían brindar este sistema desde fin de año parece ser una de las noticias de este 2012 en el ámbito de la tecnología.

De hecho, los expertos en la materia señalan acerca de esto que este tipo de desarrollos podrían ser útiles en diversos campos de la ciencia, desde la posibilidad de enseñar a cualquier a reparar un circuito que no funciona, hasta poder agregar subtítulos en tiempo real a una persona que se nos acerca en la calle hablándonos otro idioma.

Por estas razones es que Google ha centrado últimamente buena parte de sus esfuerzos en la preparación de estos lentes, y las últimas informaciones al respecto mencionan que las gafas podrían salir a la venta a finales de año por un precio que oscilaría entre los 250 y 600 dólares, dependiendo luego su valor de la aceptación que las mismas tengan en el mercado.

Al parecer, su desarrollo estará íntimamente ligado a la posibilidad de que eldispositivo óptico se integre a una cámara de baja resolución para tomar imágenes que serían cotejadas con los datos de la nube, además de añadir sensores de movimiento y sistemas de geolocalización como los que poseen la mayoría de los GPS.

Hay que destacar igualmente, que se trata de lentes que no será diseñadas para ser utilizadas todo el tiempo, sino que sólo cuando se las necesite realmente. Es en esos casos en los cuales la información aparecerá ante nuestros ojos pero no como convencionalmente lo hace en los celulares, sino por medio de la denominada “realidad aumentada”, en buena parte, gracias a la inversión de 120 millones de dólares que Google ha comenzado.

Fuente: http://www.incubaweb.com/google-prepara-lentes-realidad-aumentada/

12 Tendencias Digitales para 2012

Resumen del informe de Millward Brown´s Global Futures Group para 2012.

Las 12 tendencias son:

1. El Gaming está desatado: las grandes marcas se ponen aun más juguetonas. La vinculación, motivando e involucrando mediante la aplicación de técnicas y mecánicas de los juegos en situaciones que no lo son.
2. Solo un toque y listo: Tu móvil ahora es monedero: El móvil va siempre con nosotros, al igual que el nuestros monederos, que pasa si los unimos. Los sistemas móviles de pago.
3. La unión virtual: La televisión y medios sociales van a estimular una explosión de herramientas, tecnologías y plataformas para la interacción e investigación. Las redes sociales, plataformas y tecnologías que hacen que la gente interactúe con programas de televisión y radio crecerán explosivamente.
4. El video on-line: invaden el salón. Los smartphones y tabletas han creado un gran cambio en el consumo de medios. El incremento en el uso de múltiples tecnologías, centradas en el consumidor para el entretenimiento en casa.
5. El marketing móvil: será más social y local que nunca. En el futuro del marketing móvil entrelazado con el marketing social basado en la ubicación. caso SoLoMo.
6. El crecimiento: la única tendencia en aplicaciones que realmente importa. Los desarrollados de aplicaciones deben mirar más allá de la tienda de aplicaciones Apple si quieren ser el próximo Andry Bird. Las ventas de iPhone siguen rompiendo records, mientras las activaciones Android aceleran.
7. El comercio electrónico social de bienes de gran consumo (FMCG): caminando de puntillas entre el compromiso y el marketing. Aunque ahora contribuye menos del 5% de todas la ventas de bienes de gran consumo (FMCG), el e-commerce está a punto de crecer de forma notable.
8. El gráfico social: generará datos significativos para la medición de las marcas. Facebook tiene nuestro gráfico social. con 750 millones de usuarios y crecindo. Ahora casi todas las plataformas sociales ahora utilizan Facebook Connect para reforma la experiencia de los usuarios al incrementar la adopción y también la creación de valor añadido.
9. La huella digital: el precio real del acceso gratis. gracias a los móviles y medios digitales que nos permiten conectarnos e interactuar desde caulquier parte, los consumidores afrontarán la posibilidad de tener que pagar para controlar la forma en que se compacten los datos de sus actividades on-line.
10. La llegada de la Compartición Automática: LA redes sociales son una parte integral de la experiencia on.line. Aquellas que tendrán éxito mañana, serán las que permiten a los usuarios sobrepasar las barreras que los separan de otras personas: el tráfico on-line será empujado por los contenidos.
11. China verá una "tienda única" con la convergencia de micro-bloging, las redes sociales y los portales de información: Aunque Facebook no existe oficialmente alí, los medios sociales prosperan bajo el paraguas de alternativos locales como Ren Ren y Kaixin.
12. Al publicidad on-line: la toma de decisiones en tiempo real ya tiene un papel central. Habrá un incremento en la demanda de información sobre campaña en tiempo real, dado lugar a la aparición de procesos automáticos de toma de decisiones para la optimización de campañas.

Si deseas ver el informe completo, descárgalo en: http://www.4shared.com/office/mGbasqsZ/12_para_2012.html